Is there a demand for income tax progressivity?

Abstract

Recently Marhuenda and Ortuno-Ortin (1995) have provided a popular support for progressivity theorem that says that a marginal progressive tax always defeats a marginal regressive tax as long as individuals vote for the tax scheme minimizing their tax liabilities and the median income is less than the mean income. In this paper we provide, under similar circumstances, a popular support for regressivity theorem according to which more marginal regressivity (or less marginal progressivity) can always defeat any existing tax scheme. This move towards more regressivity (or less progressivity) is supported by the extremes of the income distribution. Combining this result with Marhuenda and Ortuno-Ortin' result implies that vote cycling is inevitable and that the demand for progressivity cannot be established in the standard Downsian framework with self-interested voters.

The politics of progressive income taxation with incentive effects

“…This tax reform is supported by a coalition of the rich and the poor as a way to shift the burden of taxation towards the middle income group. Put together, these two results imply inevitable voting cycles between progressive and regressive taxes 12 along which majority coalitions of the poor and the middle class alternate with majority coalitions of the poor and the rich. 13 Allowing for endogenous income, and thus distortionary taxation, does not alleviate the existence problem of a Condorcet winner.…”

“…The conditions they obtain seem unsurprisingly very restrictive. 15 12 Notice that it is not possible to follow Gans and Smart (1996) in restricting our analysis to a family of non-linear tax schedules that cross only once so as to reduce the multi-dimensional tax schedules into a one-dimensional index of progressivity (see also Berliant and Gouveia, 1994). Indeed, doing so would create a bias in favor of progressivity and the middle-class since a coalition of the rich and poor can only form in our model by proposing a tax schedule crossing twice from below the existing one.…”

A Positive Theory of Income Taxation

“…21 The set E (d,r) contains those admissible tax policies that tax more populous groups only if less numerous groups have been taxed to the fullest extent. Define…”

The least core in fixed-income taxation models: a brief mathematical inspection

“…A very important mathematical difficulty related to this view is that the existence of a Condorcet majority winner is not guaranteed, since the policy space of tax schedules is usually multidimensional (see for example Hindriks [7], Grandmont [8], Marhuenda and Ortuño-Ortin [6], Carbonell and Ok [9]). …”

“…However, most of the literature imposes some fairness principles to the tax schedules, i.e., a tax is increasing with the revenues in such a way that it does not change the post-tax income ranking (see Marhuenda and Ortuño-Ortin [5], Roemer [11], Hindriks [7], Carbonell and Klor [12], De Donder and Hindriks [10], Carbonell and Ok [9]). Moreover, a tax is not necessarily purely redistributive (Marhuenda and Ortuño-Ortin [5], Carbonell and Ok [9]).…”